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Portfolio strategy

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portfolio management

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Portfolio strategy

  1. 1. • Portfolio Strategy is a roadmap by which investors can use their assets to achieve their financial goals. • It refers to the design of optimal portfolios and its implication .
  2. 2. • Portfolio strategies are mainly of two types; which are active portfolio strategies and passive portfolio strategies.
  3. 3. • An investment approach in which an investor uses a variety of forecasting and assumption techniques to determine which securities to purchase in order to achieve a high return. • An active portfolio strategy is more likely to buy and sell securities with greater frequencies as the investor seeks to move available capital into more profitable stocks. • A strategy that uses available information and forecasting techniques to seek better performance than a buy and hold portfolio.
  4. 4. • Top-down Approach: In this approach, investors observe the market as a whole and decide about the industries and sectors that are expected to perform well in the ongoing economic cycle. After the decision is made on the sectors, the specific stocks are selected on the basis of companies that are expected to perform well in that particular sector. • Bottom-up: In this approach, the market conditions and expected trends are ignored and the evaluations of the companies are based on the strength of their product pipeline, financial statements, or any other criteria. It stresses the fact that strong companies perform well irrespective of the prevailing market or economic conditions.
  5. 5. • It is an investing strategy that tracks a market-weighted index . The idea is to minimize investing fees and to avoid the adverse consequences of failing to correctly anticipate the future. • It relies on the fact that markets are efficient and it is not possible to beat the market returns regularly over time and best returns are obtained from the low cost investments kept for the long term. • It relies on diversification to match the performance of some market index.
  6. 6. • Efficient market theory: This theory relies on the fact that the information that affects the markets is immediately available and processed by all investors. Thus, such information is always considered in evaluation of the market prices. • Indexing: According to this theory, the index funds are used for taking the advantages of efficient market theory and for creating a portfolio. The index funds can offer benefits over the actively managed funds because they have lower than average expense ratios and transaction costs.
  7. 7. • Patient Portfolio: This type of portfolio involves making investments in well-known stocks. The investors buy and hold stocks for longer periods. In this portfolio, the majority of the stocks represent companies that have classic growth and those expected to generate higher earnings on a regular basis irrespective of financial conditions. • Aggressive Portfolio: This type of portfolio involves making investments in “expensive stocks” that provide good returns and big rewards along with carrying big risks. This portfolio is a collection of stocks of companies of different sizes that are rapidly growing and expected to generate rapid annual earnings growth over the next few years. • Conservative Portfolio: This type of portfolio involves the collection of stocks after carefully observing the market returns, earnings growth and consistent dividend history.
  8. 8. • 1) How Much Risk Can An Investor Tolerate ? • 2) Establishing the Appropriate Asset Allocation • 3) Portfolio Rebalance: A Cost/Benefit Analysis • 4) Portfolio Performance Measurement • 5) Market Innovations
  • KsayeedaBegum

    Aug. 2, 2020
  • iamsk7

    Jul. 15, 2020
  • RoshniRahim2

    May. 23, 2020
  • GulzarAhmad64

    Nov. 27, 2019
  • mayayadav10

    Sep. 22, 2019

portfolio management

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